Alfa Laval (OM:ALFA) Expands EDF Partnership: A Fresh Look at Valuation After Nuclear Energy Deal

Alfa Laval (OM:ALFA) has expanded its long-running partnership with Electricite de France (EDF), aiming to support the latest wave of nuclear energy projects in France. Their new agreement centers on advanced heat exchanger technology and a streamlined, modular approach for upcoming EPR2 reactors.

See our latest analysis for Alfa Laval.

Alfa Laval’s renewed focus on advanced nuclear energy solutions comes as momentum in its share price has recently faded, with a 7.9% decline year-to-date and a 1-year total shareholder return of -4.9%. Despite the short-term dip, long-term returns remain compelling. Investors have seen a 53% total return over three years and nearly 119% over five years.

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With the stock currently trading below analyst targets and boasting solid long-term returns, investors might wonder whether Alfa Laval is undervalued at these levels or if the market has already factored in future growth prospects.

Most Popular Narrative: 6.9% Undervalued

With the most widely followed narrative fair value at SEK 465.93, Alfa Laval’s shares are trading at a noticeable discount to this estimate given the last close at SEK 433.80. This sets the stage for an intriguing view into the core drivers behind that valuation gap.

The strategic shift towards service-oriented offerings is delivering all-time-high service order intake, now above 30% of group sales and 40% in Marine, which is structurally increasing the stable, high-margin, recurring revenue base. This supports long-term margin expansion and greater earnings resilience.

Read the complete narrative.

Curious what powers this premium? The narrative banks on Alfa Laval shaking up its business mix and ramping up profitability. New patterns in margins, revenue, and future earnings could catch even seasoned investors off guard. Don’t miss the specifics that could rewrite market expectations. See what long-term projections underpin this bullish fair value.

Result: Fair Value of SEK465.93 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower than expected adoption of energy transition projects or a sharp uptick in competition could quickly challenge these optimistic projections.

Find out about the key risks to this Alfa Laval narrative.

Build Your Own Alfa Laval Narrative

If you have your own take or want to dig deeper into the numbers, you can easily build your own perspective in just a few minutes. Do it your way

A great starting point for your Alfa Laval research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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